How is analytics used in HR?


The key to making an organisation successful, is the right understanding of people management and thus a strategic implementation of People Analytics is important. Human Resources or HR has now entered a new innovative role that can help the top management with advisory decisions. Because the decisions have more value when they are objective, HR Analytics plays a vital role in creating an effective hiring and retention algorithmn.

While descriptive, operational as well as predictive analytics methodologies remain the same across domains, what we will see here are a few examples of how Analytics is used in HR.

HR is a huge team which churns out humungous amount of data and metrics everyday. HR Matrices involves personalised Compensations and Benefits, training, performance management, retention, recruitment and workforce management. Analytics can rope all this information together to enhance organisation effectiveness and the bottomline.

Some of the areas where hard core data driven analytics can be used –

1)      Talent acquisition, retention and forecasting: Analytics can be used to optimise the selection process, to identify which candidates are likely to flourish and even predict the hires tenure in an organisation. Through algorithms one can find out the factors that will affect attrition and retention and hence make necessary policy changes. One can even identify patterns in historical attrition data.

2)     Headcount Management: Based on the companies % revenue growth,  HR Analytics can be used to predict the growth and resource capacity of an organisation to keep up as well as boost the growth.

3)     Measuring Hiring Effectiveness: Based on the historic data of employee records such as Educational Qualifications, work experience, age, gender and demographic details one can build a model to see which factors are likely to be most suited or effective for a certain business role. These studies can also help in finding a replacement in case of attrition.

4)     Compensation and Benefits: A compensation prediction tool can be built to study the drivers of compensations and its relationship with the attributes to optimise compensation for each employee. The drivers may include the company, employee qualifications, competition (if data is available) and general market scenario.

5)     Employee Satisfaction, Survey Analysis and Feedback Analysis : One can build a regression model to study employee response survey to come up with factors that can enhance employee satisfaction and experience. A consistent and appropriate feedback mechanism is has proved to bring the best out of the human capital by some top organisations. Analytics can help in studying the effectiveness of a feedback process and suggest necessary insights and recommendations to meet business objectives.

Hence, in the above examples one can clearly see that Analytics in HR can be greatly used to manage human capital effectively, to minimise cost and increase business profitability and to solve problems of Human Resources. It can be used in transformational HR, employee engagement, enhancing organisational culture, strategic planning and process improvement. Analysing the return on human capital investment and measuring the impact of HR can drive performance, productivity, and profitability.

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